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2010 | Buch

Handbook of Bioenergy Economics and Policy

herausgegeben von: Madhu Khanna, Jürgen Scheffran, David Zilberman

Verlag: Springer New York

Buchreihe : Natural Resource Management and Policy

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Concerns about energy security, uncertainty about oil prices, declining oil reserves, and global climate change are fueling a shift towards bioenergy as a renewable alternative to fossil fuels. Public policies and private investments around the globe are aiming to increase local capacity to produce biofuels. A key constraint to the expansion of biofuel production is the limited amount of land available to meet the needs for fuel, feed, and food in the coming decades. Large-scale biofuel production raises concerns about food versus fuel tradeoffs, about demands for natural resources such as water, and about potential impacts on environmental quality.

The book is organized into five parts. The introductory part provides a context for the emerging economic and policy challenges related to bioenergy and the motivations for biofuels as an energy source. The second part of the handbook includes chapters that examine the implications of expanded production of first generation biofuels for the allocation of land between food and fuel and for food/feed prices and trade in biofuels as well as the potential for technology improvements to mitigate the food vs. fuel competition for land. Chapters in the third part examine the infrastructural and logistical challenges posed by large scale biofuel production and the factors that will influence the location of biorefineries and the mix of feedstocks they use. The fourth part includes chapters that examine the environmental implications of biofuels, their implications for the design of policies and the unintended environmental consequences of existing biofuel policies. The final part presents economic analysis of the market, social welfare, and distributional effects of biofuel policies.

Inhaltsverzeichnis

Frontmatter

Introduction

Frontmatter
Chapter 1. Bioenergy Economics and Policy: Introduction and Overview
Abstract
Concerns about energy security, high oil prices, declining oil reserves, and global climate change are fuelling a shift towards bioenergy as a renewable alternative to fossil fuels. Public policies and private investments around the globe are aiming to increase national capacities to produce biofuels. A key constraint to the expansion of biofuel production is the limited amount of land available to meet the needs for fuel, feed, and food in the coming decades. Large-scale biofuel production raises concerns about food versus fuel trade-offs, demands for natural resources such as water, and its potential impacts on environmental quality. Policies to support biofuel production have distributional implications for consumers and producers, farm and nonfarm sectors, global trade in food and biofuels, and the price of land and other scarce resources.
Madhu Khanna, Jürgen Scheffran, David Zilberman
Chapter 2. Are Biofuels the Best Use of Sunlight?
Abstract
Biofuels are liquid sunlight. In effect, we use plants to convert raw solar energy into a liquid (ethanol or biodiesel) that can be used as an energy source for our transportation systems. The question this chapter asks is whether this conversion process is the best way to make use of solar energy. Photovoltaics clearly dominate plants in terms of technical conversion efficiency, with conversion rates for commercial cells of the mid-2000s that are 2–10 times higher than plants and operate throughout the year rather than just during the growing season. But photovoltaics provide electricity, which is not currently cost-effective for use in transportation. As research into photovoltaics and battery technology is still in its infancy, the potential for commercially viable technology breakthroughs seems high.
Gerald C. Nelson
Chapter 3. Perennial Grasses as Second-Generation Sustainable Feedstocks Without Conflict with Food Production
Abstract
Biofuel production from maize grain has been touted by some as a renewable and sustainable alternative to fossil fuels, while being criticized by others for removing land from food production, exacerbating greenhouse gas emissions, and requiring more fossil energy than they produce. The use of second-generation feedstocks for cellulosic biofuel production is widely believed to have a smaller greenhouse gas footprint than first-generation feedstocks. In particular, perennial grasses may provide a balance between the high productivity necessary to minimize the amount of land area necessary for feedstock production and the sustainability of the perennial growth habit.
Frank G. Dohleman, Emily A. Heaton, Stephen P. Long
Chapter 4. Present and Future Possibilities for the Deconstruction and Utilization of Lignocellulosic Biomass
Abstract
Current technologies for the deconstruction of lignocellulosic biomass rely on physical−chemical pretreatment processes followed by enzymatic hydrolysis. These technologies, while able to efficiently produce sugars, also allow the formation of degradation products that are inhibitory to microbes such as yeast or bacteria which are used for fermentation. The status of current deconstruction technologies and the role of genomics and the “New Biology” for producing feedstocks and tailor-made microbes with characteristics that make them more amenable to fermentation-based processes are discussed.
Hans P. Blaschek, Thaddeus Ezeji, Nathan D. Price

Interactions Between Biofuels, Agricultural Markets and Trade

Frontmatter
Chapter 5. Price Transmission in the US Ethanol Market
Abstract
We use nonlinear time series models to assess price relationships within the US ethanol industry. Daily ethanol, corn, and crude oil futures prices observed from mid-2005 to mid-2007 are used in the analysis. Our results suggest the existence of an equilibrium relationship between the three prices studied. Only ethanol prices are found to adjust to deviations from this relationship. The evolution of ethanol prices in relation to corn and crude oil prices may have important implications for the long-run competitiveness of the US ethanol industry.
Teresa Serra, David Zilberman, José M. Gil, Barry K. Goodwin
Chapter 6. Biofuels and Agricultural Growth: Challenges for Developing Agricultural Economies and Opportunities for Investment
Abstract
Global projections for increasing food demand combined with increasing demand for energy from all sources – including crop-based biofuels – point toward greater stress on food systems and their supporting ecosystems. In many parts of the world, increasing household incomes has translated into increasing demands for energy, of which transportation fuel comprises a fast-growing share. Accompanying the world’s steady population growth is an increasing demand for food and the necessary feedstuffs to fuel the requisite increases in livestock production. The combination of these two trends will inevitably lead to greater stresses and demands on the natural resource base and eco-systems that underlie the world’s food and energy production systems – such as land and water. In this chapter, we examine the increasing demands on agricultural production systems, within the context of both biofuels and demographically driven demand for food and feed products, and the implied stresses that these drivers represent. By looking at the implied crop productivity improvements that are necessary to maintain adequate supplies of food and feed for a growing global population, we are able to infer the magnitude of investments in agricultural research, among other policy interventions (such as irrigation investments), that are needed to avoid worsening food security outcomes in the face of growing biofuel demands. From our analysis, clear policy implications will be drawn as to how to best avoid the deterioration in human well-being, and recommendations for strengthening food systems and their ability to deliver needed services will also be made. By illustrating the policy problem in this way, we hope to better clarify the key issues that connect biofuels growth to agricultural growth, human welfare, and policy-focused interventions and investments.
Siwa Msangi, Mandy Ewing, Mark Rosegrant
Chapter 7. Prospects for Ethanol and Biodiesel, 2008 to 2017 and Impacts on Agriculture and Food
Abstract
The impacts of increased biofuels production on key agricultural variables and consumer prices are analyzed using a multisector econometric model AGMOD. A “baseline” scenario and three alternative crude oil price scenarios are presented. Results indicate that conventional biofuels mandates of the Energy Independence and Security Act of 2007 can be met with moderate increases in crop area and consumer prices. Biodiesel production will increasingly need to draw on non-soybean oil sources. However, except under the “high crude oil price” scenario, ethanol and biodiesel will require a premium over their energy equivalent prices. Production of cellulosic ethanol is likely to be minor through 2017.
John (Jake) Ferris, Satish Joshi
Chapter 8. The Global Bioenergy Expansion: How Large Are the Food−Fuel Trade-Offs?
Abstract
We summarize a large set of recent simulations and policy analyses based on FAPRI’s world multimarket, partial-equilibrium models. We first quantify and project the emergence of biofuel markets in US and world agriculture for the coming decade. Then, we perturb the models with incremental shocks in US and world ethanol consumption in deviation from this projected emergence to assess their effects on world agricultural and food markets. Various food−biofuel trade-offs are quantified and examined. Increases in food prices are moderate for the US ethanol expansion and even smaller for the ethanol expansion outside the United States, which is based on sugarcane feedstock, and which has little feedback on other markets. With the US expansion, the high protection in the US ethanol market limits potential adjustments in the world ethanol markets and increases the demand for feedstock within the United States. Changes in US grain and oilseed market prices propagate to world markets, as the United States is a large exporter in these markets. With changes in world prices, land allocation in the rest of the world responds to the new relative prices as in the United States but with smaller magnitudes because price transmission to local markets is less than full.
Jacinto F. Fabiosa, John C. Beghin, Fengxia Dong, Amani Elobeid, Simla Tokgoz, Tun-Hsiang Yu
Chapter 9. Demand Behavior and Commodity Price Volatility Under Evolving Biofuel Markets and Policies
Abstract
Rising petroleum prices, growing incomes in developing nations, and changes in energy policy around the world are having a significant effect on agricultural markets as biofuels begin to play a more substantial role in meeting the world’s energy needs. Some see biofuels as a means to reduce carbon emissions, increase energy independence, and raise farm income. Others note that the new demand for commodities to produce biofuels can lead to higher food prices, potentially undermining food security, and bring about unintended environmental consequences from expanding crop acreage that may result in greater carbon emissions. While there are a large number of studies that examine the influence of biofuels and biofuel policy on the prices of agricultural commodities, one poorly understood impact of greater biofuel production is how these changes have affected commodity price volatility. Price volatility is important for food security, farm income, policy formation, and investment behavior. We examine how greater biofuel production, whether motivated by policy or market prices, might change commodity price volatility in the future.
Seth Meyer, Wyatt Thompson

Designing the Infrastructure for Biofuels

Frontmatter
Chapter 10. Optimizing the Biofuels Infrastructure: Transportation Networks and Biorefinery Locations in Illinois
Abstract
Growing biofuel mandates pose considerable challenges to the infrastructure needed across all stages of the supply chain − from crop production, feedstock harvesting, storage, transportation, and processing to biofuel distribution and use. This chapter focuses on the biofuel transportation and distribution network infrastructure, using Illinois as a case study. Building on an optimal land use allocation model for feedstock production, a mathematical programming model is used to determine optimal locations and capacities of biorefineries, delivery of bioenergy crops to biorefineries, and processing and distribution of ethanol and co-products (DDGS). The model aims to minimize total system costs in a multiyear planning horizon for the period of 2007–2022. Certain locations may be more suitable for corn and corn stover-based ethanol plants, others more for producing ethanol using perennial grasses (miscanthus)
Seungmo Kang, Hayri Önal, Yanfeng Ouyang, Jürgen Scheffran, Ü Deniz Tursun
Chapter 11. The Capital Efficiency Challenge of Bioenergy Models: The Case of Flex Mills in Brazil
Abstract
Bio-based energy sources have received increasing interest in recent years as petroleum prices have risen, geo-political instability has increased, and climate change has been in evidence. Extensive farming systems producing bio-based feedstocks, such as maize and sugarcane, are the models most widely used. Similar models are planned for dedicated cellulose crops such as miscanthus and eucalyptus. Bioenergy feedstock production that follows the current commercial agricultural model may inefficiently employ capital as the spatial density of the system, and the relative gravimetric density of the feedstock and volumetric density of the fuel products are low. The example of ethanol production in Mato Grosso, Brazil demonstrates the key concepts of density and capital intensity that are so critical to the efficient use of capital.
Peter Goldsmith, Renato Rasmussen, Guilherme Signorini, Joao Martines, Carolina Guimaraes

Environmental Effects of Biofuels and Biofuel Policies

Frontmatter
Chapter 12. Could Bioenergy Be Used to Harvest the Greenhouse: An Economic Investigation of Bioenergy and Climate Change?
Abstract
Bioenergy interest has been greatly stimulated by the fuel price rises in the late 2000s. Bioenergy is seen as a way to protect against the rising fossil fuel prices and the political insecurity of importing petroleum from the Middle East. Furthermore, growing evidence suggests that combustion of fossil fuels is precipitating climate change (Intergovernmental Panel on Climate Change 2007). Thus, at present three factors may influence the prospects for bioenergy: (1) increases in crude oil prices, (2) concerns for national energy security matters, and (3) concerns for climate change and global warming.
Bruce A. McCarl, Thein Maung, Kenneth R. Szulczyk
Chapter 13. A Simple Framework for Regulation of Biofuels
Abstract
In this chapter, we develop a framework to regulate producers of biofuel-blended fuels using GHG emissions standards, while accounting for heterogeneity and uncertainty. To this end, we categorize the net GHG emissions caused by a regulated site into two parts: direct and indirect emissions. Direct emissions arise both at and away from the final regulated site but are directly attributable to the final output. Indirect emissions, on the other hand, are emissions not attributable to any single regulated entity, but are caused by the interaction of aggregate supply and demand. An example is emissions due to indirect land use change (ILUC). The two parts, i.e., direct and indirect emissions, are computed using the best available data. The sum of the site-specific direct emissions per unit of output and average indirect emissions per unit of output is, then, compared to the emission threshold or standard.
Deepak Rajagopal, Gal Hochman, David Zilberman
Chapter 14. Market and Social Welfare Effects of the Renewable Fuels Standard
Abstract
This chapter evaluates the welfare and greenhouse-gas effects of the Renewable Fuel Standard (RFS) in the presence of biofuel subsidies. In our numerical model, demand for gasoline and ethanol stems from consumer demand for driving miles, but all fuels have congestion and environmental external costs. Our estimates of the effects of ethanol mandates on greenhouse gases and social welfare (relative to the status quo) are sensitive to assumptions about the gasoline supply elasticity. The impact of the mandate, by itself, on greenhouse gas emissions ranges from −0.5 to −5% relative to the status quo and is reduced when the mandate is accompanied by a tax credit. The welfare costs of the mandate relative to the socially optimal policy range from $60 B to $115 B depending on the elasticity of gasoline supply. The provision of a tax credit in addition to the mandate leads to additional deadweight losses that range from $1.1 to $12 billion. An ethanol mandate policy provides assured demand for ethanol and therefore supports the domestic ethanol industry, particularly the cellulosic biofuel industry. However, such policy may harm the well-being of the country as a whole, even relative to the ethanol support policy that was in place before the current mandate was passed.
Amy W. Ando, Madhu Khanna, Farzad Taheripour
Chapter 15. US–Brazil Trade in Biofuels: Determinants, Constraints, and Implications for Trade Policy
Abstract
This chapter compares the cost and greenhouse gas (GHG) mitigation benefits of corn ethanol in the United States relative to sugarcane ethanol produced in Brazil and develops a stylized model to analyze its implications for the impact of US biofuel policies on social welfare and GHG emissions. The policies considered here include the $0.51 per gallon blender’s subsidy for ethanol and the import tariff of $0.54 per gallon on sugarcane ethanol. Our analysis shows that the combined subsidy and tariff policy decreases welfare by about $3 B depending on assumptions about the extent of market power the United States has in the world ethanol market. These policies also provide negligible (in some cases negative) benefits in the form of GHG reduction. The results indicate that the United States would gain from removing domestic and trade distortions in the ethanol market. Increasing ethanol demand in the world market will entail expansion of Brazil’s ethanol industry. We briefly discuss concerns about the environmental impacts of this expansion.
Christine Lasco, Madhu Khanna
Chapter 16. Food and Biofuel in a Global Environment
Abstract
As the human population and incomes continue to grow while the petroleum reserve is declining and the concerns about environmental damage are increasing, the world community is challenged to supply ever-greater quantities of energy without harming the environment. The world primary energy demand is predicted to more than double between 2006 and 2030, and yet most oil-producing countries will reduce output over that period (IEA 2008). OPEC’s share of total oil production will grow from 41 to 51%, and the oil production growth will need to come mostly from the small number of countries that own remaining oil resources.
Gal Hochman, Steven Sexton, David Zilberman
Chapter 17. Meeting Biofuels Targets: Implications for Land Use, Greenhouse Gas Emissions, and Nitrogen Use in Illinois
Abstract
This article develops a dynamic micro-economic land use model to identify the cost-effective allocation of cropland for traditional row crops and perennial grasses and the mix of cellulosic feedstocks needed to meet predetermined biofuel targets over the 2007–2022 period. Yields of perennial grasses obtained from a biophysical model and together with county level data on costs of production for Illinois are used to examine the implications of these targets for crop and biofuel costs, greenhouse gas emissions, and nitrogen use. The economic viability of cellulosic feedstocks is found to depend on their yields per acre and the opportunity cost of land. The mix of viable cellulosic feedstocks varies spatially and temporally with corn stover and miscanthus coexisting in the state; corn stover is viable mainly in central and northern Illinois while miscanthus acres are primarily located in southern Illinois. Biofuel targets lead to a significant shift in acreage from soybeans and pasture to corn and a change in crop rotation and tillage practices. The biofuel targets assumed here lead to a reduction in greenhouse gas emissions, but an increase in nitrogen use.
Madhu Khanna, Hayri Önal, Xiaoguang Chen, Haixiao Huang
Chapter 18. Corn Stover Harvesting: Potential Supply and Water Quality Implications
Abstract
Corn stover is a likely bioenergy feedstock, but whether farmers would find harvesting stover profitable depends on its price as well as on the prices of corn and other agricultural commodities. We analyze the potential supply of corn stover and the associated changes in crop rotations and tillage practices for a major US corn production region, the state of Iowa. Using remote-sensing crop-cover maps and digitized soils data as inputs to integrated economic, geographical, and environmental models, we simulate the land use changes in response to alternative crop and corn stover prices. The ensuing changes in soil erosion, nitrogen runoff, and phosphorus runoff are predicted with the Environmental Policy Integrated Climate model. We find that the amount and the location of corn stover available for sale at a viable stover market are greatly influenced by the primary product (crop) markets. High corn stover prices can significantly affect land use, which in turn may incur significant soil erosion as well as nitrogen and phosphorus runoff in the region.
L.A. Kurkalova, S. Secchi, P.W. Gassman

Economic Effects of Bioenergy Policies

Frontmatter
Chapter 19. International Trade Patterns and Policy for Ethanol in the United States
Abstract
The US trade policy for ethanol affects imports and all aspects of ethanol production and use. The paper reviews U.S. trade policy for ethanol and then examines the pattern of imports of ethanol. Despite high tariff barriers the U.S. is a major ethanol importer and we document the pattern of ethanol imports over the past decades. We then show how ethanol imports have responded to market conditions. We find that the demand for imports is likely to have been very elastic in recent years. Our econometric estimates show how ethanol imports have responded to market conditions. We find a significant supply elasticity for imports into the U.S. of about 3.0. Finally we use the forgoing analysis to discuss potential impacts of trade policy changes under alternative market conditions that depend crucially on domestic biofuel policies.
Hyunok Lee, Daniel A. Sumner
Chapter 20. The Welfare Economics of Biofuel Tax Credits and Mandates
Abstract
An ethanol consumption mandate is a tax on fuel consumers with a fixed oil price, but consumer fuel prices may decline with endogenous oil prices, putting the burden on oil producers. The ethanol consumption mandate has an ambiguous effect on total fuel consumption, CO2 emissions, and miles traveled. A tax credit increases fuel consumption and miles traveled. But a tax credit subsidizes gasoline consumption in lieu of a binding mandate, contradicting energy and environmental policy goals while providing no extra support to farmers. A mandate of 36 bil. gallons by 2022 will cost taxpayers $28.7 bil., potentially generating up to $37 bil. in annual social deadweight costs of increased CO2 emissions, pollution, miles traveled, and dependence on foreign oil. The intercept of the ethanol supply curve is above the gasoline price, implying part of the price premium due to ethanol policy is redundant and represents “rectangular” deadweight costs that dwarf standard measures. Historically, corn subsidies were required for any ethanol production to occur; ethanol import tariffs, mandates, production subsidies, and tax credits were not enough. The claim by proponents that ethanol policy reduces tax costs of farm subsidy programs is therefore in doubt as farm subsidies make ethanol policy more inefficient and vice-versa.
Harry de Gorter, David R. Just
Chapter 21. Biofuels, Policy Options, and Their Implications: Analyses Using Partial and General Equilibrium Approaches
Abstract
In this chapter, we highlight some important aspects of biofuels development and policies from partial and general equilibrium perspectives. We first examine US biofuel policy backgrounds to determine factors which caused the boom in the ethanol industry in recent years. Then, we use a partial equilibrium model to investigate the economic consequences of further expansion in the ethanol industry for the key economic variables of the US agricultural and energy markets. This analysis is done for a range of alternative policy options and crude oil prices. Finally, we extend our analyses to examine consequences of further biofuel production at a global scale.
Farzad Taheripour, Wallace E. Tyner
Chapter 22. Welfare and Equity Implications of Commercial Biofuel
Abstract
New sources and uses of biofuel energy offer the prospect of climate change mitigation and less reliance on fossil fuels. At the same time, biofuel represents an unusual precedent in economics, the possibility of substitution between two essential but very different commodities, food and energy. The first characteristic has dramatically heightened interest in biofuel production around the world, but particularly in high-income economies, whose expenditure patterns are most energy-intensive. Rising concerns about the need for climate stabilization and rapid innovation to reduce greenhouse gas (GHG) emission have stimulated visions of a booming new agribusiness energy industry, with pervasive induced effects on transportation and related sectors. At the same time, diversion of agricultural resources to energy production has implications for food markets that are only beginning to be fully understood, but are of special concern to poor countries whose expenditure patterns are mostly food-intensive. Both commodities are essential to human well-being, and their prices are important determinants of real living standards.
In this paper, we assess the consequences of energy and food price uncertainty for the poor, using a variety of empirical assessment techniques. Beginning with traditional poverty indicators, we appraise the effect of energy and food price vulnerability on the existing burden of poverty, providing concrete indications for policy makers about distributional incidence. A second approach decomposes energy and food price effects across the economy, showing how the embodied costs of these basic commodities affect overall household purchasing power. Finally, we use a general equilibrium framework to elucidate the complex pathways through which energy and food prices interact to affect both household incomes and the cost of living. Each approach offers different insights that can support better foresight and more effective policy responses, but a few general patterns emerge. It is clear from this analysis, for example, that a North−South dichotomy between relative energy and food dependence, respectively, may lead to persistent contention regarding the use of agricultural resources for energy production. In particular, food price vulnerability is strongly regressive across income distributions, while energy price vulnerability is strongly progressive. This conclusion reaffirms productivity oriented, and intensive rather than extensive approaches to biofuel development.
Fredrich Kahrl, David Roland-Holst
Chapter 23. European Biofuel Policy: How Far Will Public Support Go?
Abstract
The strong biofuel expansion experienced in the European Union (EU) originates in the incentives set up by Member States (MSs) within a global framework provided by the EU. A significant part of the EU rapeseed production (more than half) is now channeled into the energy market. MSs support the development of biofuels through subsidies/tax exemptions, mandatory blending, and import barriers (at least for ethanol). Several motivations for supporting biofuels have been put forward. For some MSs, the motivation was clearly to increase agricultural income (e.g., in France and Germany). In other cases, biofuels (produced domestically or imported) were mainly seen as a means to abate GHG emissions. Public support for biofuels has recently been questioned. Some potentially negative effects of biofuels (most notably the indirect land use change) have fueled the debates in the EU Parliament and Commission over the adoption of the 2008 Renewable Energy Directive. These discussions have led to the adoption of less stringent mandatory incorporation targets for 2020 (with respect to the initial 2007 proposal), as the objectives are now set in terms of “renewable fuels” (i.e., biofuels, hydrogen, and green electricity). In spite of an agreement on targets for 2020, some important questions still need to be addressed. The indirect land use change triggered off by biofuel production is the most critical. The ability of the Commission to come up with a clear methodology to address this issue is a necessary condition for the enforcement of the biofuel targets.
Jean-Christophe Bureau, Hervé Guyomard, Florence Jacquet, David Tréguer
Chapter 24. Conclusions
Abstract
Renewable liquid fuels offer a pragmatic and low-carbon alternative to depletable crude oil with current vehicle technology and infrastructure, while serving a number of other domestic objectives as well, such as energy security and rural economic development. Biofuels are produced from plants that capture solar energy through photosynthesis and convert it to starch that can be converted to fuel and combusted. A dominant portion of the carbon emissions released from conversion of biomass to energy is carbon sequestered by plant growth in both above-ground and below-ground biomass, making this potentially a carbon neutral source of energy. The extent to which biofuels are actually carbon neutral depends on the amount of fossil fuels used in the production of the feedstock crop and in its conversion to usable fuel. While photovoltaic technology offers greater promise in its ability to provide usable solar energy per unit of land (Nelson), its high cost and the current status of battery technology limit its usefulness in the near future.
Madhu Khanna
Backmatter
Metadaten
Titel
Handbook of Bioenergy Economics and Policy
herausgegeben von
Madhu Khanna
Jürgen Scheffran
David Zilberman
Copyright-Jahr
2010
Verlag
Springer New York
Electronic ISBN
978-1-4419-0369-3
Print ISBN
978-1-4419-0368-6
DOI
https://doi.org/10.1007/978-1-4419-0369-3